Week ahead 23 May

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The main focus this week will be on the second estimate of first quarter GDP

A closer look at Q1 UK GDP

The second official report on GDP for the three months to March is due Thursday. The preliminary report out last month showed that economic growth slowed to 0.4% from 0.6% in the final quarter of last year. By sector, services contributed to GDP, while production and construction were drags.

This week’s report is likely to confirm GDP grew 0.4% in the first quarter. Also, it will provide a first look at how the expenditure components – private consumption, government spending, business investment and net exports - performed. The strength of services suggests that private consumption remained the main driver of UK economic growth. In contrast, the foreign trade report for the first quarter out earlier this month indicates that net exports remained a drag on GDP. Meanwhile, business investment likely weakened as the low crude oil price dragged on the demand of oil and gas industry for capital goods such as machinery and equipment.

The second estimate will also give a more reliable picture of how manufacturing sub-sectors fared at the start of the year. The preliminary report contained some surprises: consumer-facing sectors - which have held up in recent quarters – posted falls, and non-metallic minerals saw the largest gain even though construction contracted.

Similarly, the second estimate of US GDP for the first quarter is due Friday. The advance report showed that US growth slowed to 0.5% on an annualised basis from 1.4% previously.

This week we’ll be blogging about business investment, and the sector spotlight falls on non-metallic minerals.

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